Reverse Mortgage Basics
Posted on Aug 9, 2010 04:44:09 PM
A reverse mortgage is almost an entirely different kind of second mortgage or secondary equity mortgage. It’s called a Home Equity Conversion Mortgage (HECM) and lets you borrow money against your home’s value—the key contrasting fact, though, is that you are not required to make monthly repayments. You get to enjoy the money and repay it whenever you are ready to.
Requirements and Benefits
This program is for senior citizens who are at least 62 years old and have a home with at least some equity in it. Perhaps you are a senior couple who is having trouble maintaining your way of life with your current pipeline(s) of income; perhaps you need to do house repairs or want to renovate; or maybe you and your spouse just want to take a nice long vacation. In any case, you—the Senior Citizen—are free spend the money however you like.
Spending the money however you like—this even could be the closing costs associated with the reverse mortgage and other fees.
Please read through the following key points you should generally know about reverse mortgages:
The proceeds from a reverse mortgage will never be taxed, and the lending-bank can never evict or harass you or foreclose on your home for not repaying the loan or even the interest due on it.
They are FHA (Federal Housing Administration) insured.
If you have a current mortgage or lien, usually the proceeds from a reverse mortgage can even pay the difference of that.
The current FHA-HECM limit is $625,000—so there should be no concerns over the limits most likely.
You retain ownership rights to your home, including the ability to modify/renovate—as long as you keep the property taxes, insurance and other normal household fees that would be associated with any other conventional mortgage.
You also have options as to how you receive payments:
Tenure—Equal amounts are sent to you long as you or your spouse lives, maintains the house and lives in it.
Term—Equal monthly checks for a specific time line
Line of Credit—You choose how much you need at any particular time, until your loan is exhausted
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